Q. What metrics do you use to determine whether to fund a new project?
A. Anybody can calculate an ROI [return on investment], justify it and make it look good. But the bottom line is: Over time, what kind of sustainable value have you brought as a result of spending the company’s capital dollars? That’s big with me, and we have a fairly rigorous process for [determining] that here.
Q. What is that process?
A. You have to demonstrate and be accountable for—that’s the key part, accountable for—how a capital expenditure is going to grow topline revenue, reduce operating expenses, increase profits, help create or strengthen our brand, or help us mitigate an enterprisewide risk. So with those criteria—it can be one of those five—you have to translate and compare the cost of doing something against a well-defined benefit strategy. We have a project accounting capability within the company that allows us to tie a capital expenditure against the benefit. That’s something we can measure going forward.
Q. Who signs off on a proposal?
A. We have an I.T. Council—a governance forum where all the company’s CIOs collaborate around a new project. It goes through a due-diligence process. There again, it’s tied to the EA [the enterprise architecture framework] and metrics. If it’s approved, it goes to the investment committee, which is really the company’s executive committee. What’s important in that forum is to develop a strong business case, by describing the benefits and setting expectations.
Q. During the life of a project, how do you determine that things are on track?
A. You may complete the project and start measuring the benefits from that point. On a bigger project, you may take a staged approach. During the project’s lifecycle, you expect to accrue “X” benefits within the first six months and here’s why. I like that approach on big projects because you can do a hard temperature check on whether you are seeing the returns you expected.
Q. Have you ever worked on a project that’s been canceled or scaled back dramatically?
A. Not since I have been here.
